More Mid Cap happiness

My recent writings (publicly and separately to clients) about the Nasdaq being at extremes, the overweight (an over reliance) on the top 5-8 stocks in that index and investors paying for “growth or revenue at any price”, ultimately lead to commentary about allocating monies in mid cap stocks and especially as I stick with my bottom-up fundamental value and contrarian based investing style.

Whilst short-term news about relative outperformance and phrases involving “style or sector rotation” can irk me…

the S&P 400 Mid Cap and the Russell 2000 index have both soared 13.5% since their September 24, 2020 lows,

while the S&P 500 and the Nasdaq 100 have climbed 7.3% and 8.1% respectively.

Of course, we’ll take any of those returns any fortnight of the year,

but the movement of money away from expensive (growth with zero earnings) towards cheap (companies with actual profit) isn’t the most radical suggestion I have made.

October 9, 2020

by Rob Zdravevski

rob @karriasset.com.au